FinTech in Focus
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The Latest Blockchain Developments …
Hardly a week goes by without new developments surrounding the digital ledger technology that underpins bitcoin. Within the past week, we’ve seen R3CEV, a blockchain-focused consortium of 42 global banks, successfully complete a distributed-ledger experiment that involved 11 financial institutions. The test, the first in a series, used “an R3-manged private peer-to-peer distributed ledger, underpinned by Ethereum technology” and hosted on Microsoft’s Azure platform. R3CEV plans to test other distributed ledgers in 2016.
Around the same time R3CEV celebrated its first successful distributed-ledger trial, Digital Asset Holdings, a firm run by Blythe Masters, announced it had raised more than $50 million. That’s roughly $15 million more than the company was reported to be seeking, in a fundraising round that was originally said to be struggling.
… And the Headlines Don’t End There
In Davos, International Monetary Fund (IMF) Managing Director Christine Lagarde unveiled the IMF’s newest report, “Virtual Currencies and Beyond: Initial Considerations.” The report focuses on virtual currencies’ potential and the regulatory and policy challenges they pose. It also examines the potential of distributed ledger technology. "This is the beginning, because we know relatively little about the virtual currencies,” Lagarde said.
The UK is also looking into the potential of blockchain in tax collection, passports issuance and data management in general. UK Chief Scientific Adviser Sir Mark Walport released a report providing recommendations to determine what actions are needed “to facilitate the beneficial use of distributed ledger technology and to avoid possible harms.” Distributed ledger technology isn’t for everyone, as the state of Vermont has found. “In light of the very limited possible benefits and the likely significant costs for either entering into a private or public blockchain or setting up a state-operated blockchain, at this time, blockchain technology would be of limited value in conducting state business,” the state said in a report.
Algorithms and Financial Markets
Big Data Federation announced last Tuesday that its stock-earnings forecasting platform was released to the public following beta testing. The PredictionValley platform has an average accuracy rate of 98 percent in predicting business fundamentals and 80 percent in forecasting a stock’s direction, the federation said. Similarly, the Financial Times has an interesting piece on the use of artificial intelligence in financial markets and how firms are investing in it. Also worth mentioning, the Bombay Stock Exchange announced an algorithm trading test environment that will allow participants to test their algorithms across equities and derivatives, free of charge.
Promoting Financial Innovation in Asia
A couple of recent developments to note: The Monetary Authority of Singapore published an addendum to Singapore President Tony Tan Keng Yam’s address to Parliament on Jan.15. MAS stated that it would “actively collaborate with the industry to make swift, simple and secure digital payments available to all individuals and businesses, encourage financial institutions to set up innovation laboratories in Singapore to test-bed solutions, and provide a conducive regulatory environment.” Around the time of the address, South Korea’s Financial Services Commission released its 2016 Financial Policy Focus, which included a number of measures to support innovative financial services firms.
Perspectives on Digital Innovation
Last week, GE released its fifth Global Innovation Barometer 2016. The report is based on a survey of senior executives charged with or actively engaged in a firm's innovation strategy and “informed” members of the public. According to GE, the fourth industrial revolution "is the next wave of innovation impacting the way the world connects and optimizes machines." From the findings, the U.S. is the leading champion of innovation, followed by Japan, Germany, China and South Korea. The slide deck provides some interesting insights, including the one shown below.
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